Social and Behavioral Sciences Commons^™

Effects Of Technological Improvement In The Ict Producing Sector On Business Activity, Hian Teck Hoon, Edmund S. Phelps

Research Collection School Of Economics

It seems to be taken for granted by many commentators that the sharp decline in prices of computers, telecommunications equipment and software resulting from the technological improvements in the information and communications technology (ICT)-producing sector is good for jobs and is a major driving force behind the non-inflationary employment miracle and booming stock market in the latter half of the nineties in the U.S. and their recurrence since 2004. We show that, in our model, a technical improvement in the ICT-producing sector by itself cannot explain a simultaneous increase in employment and a rise in firms’ valuation (or Tobin’s Q …